Sep 2, 2020

The Legal Practicalities Of The Use Of Blockchain As A Form Of Online Dispute Resolution (Part 1) | T. Koroye



Conflict is an integral part of society and in all facets of human interactions and relations, prompting the development of means and avenues for the resolution of those conflicts, either through exaggerated violence, or other peaceful means.[1] These avenues of dispute resolution have evolved over the centuries, from settlement by the elderly, to royal or religious institutions, to the institutions set up and recognised by the State.[2] Most developed and developing societies have adopted the State’s means of dispute resolution, which is the recognition of the Court system to resolve issues ranging from personal grievances to complex contractual matters.[3]

The increasing complex nature of disputed issues and industry, the number of contracting parties involved, and the increasing strain on the court system due to the number of issues to be resolved with limited resources, necessitated the rise of Alternative Dispute Resolution systems (hereinafter ADR).[4] ADR comprises of, but is not limited to, mediation, negotiation and arbitration. With growing interest from contracting parties, both national and international, on the inclusion of an arbitration clause in their commercial agreements as the first form of resolution on instance of a dispute, States and the international community have developed robust regulatory regimes for the recognition and enforcement of arbitral awards.[5] The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the New York Convention)[6] is the foremost international treaty for the standardisation of arbitration by States, regardless of their internal theory of recognition, such as the jurisdictional, hybrid and autonomous theories.[7]

In recent decades, the nature of commercial transactions have evolved, due to the rise of globalisation and digitalised platforms, prompting the emergence of a new medium of dispute resolution referred to as Online Dispute Resolution (ODR), revolutionising dispute settlement through its prompt and cost effective process.[8] The existence of ODR relies on the virtual prowess of Information and Communication Technology (ICT), which constantly evolves with innovations. The emergence of Blockchain as a disruptive technology on not just the commercial industry, but including real estate, health-care, content distribution, etc., has drawn an enquiry on the applicability of the technology as a means of dispute resolution.[9] This work will explore the nature of online dispute resolution and blockchain as a disruptive technology, and the legal practicalities of adopting same as a form of ADR for international commercial transactions.

With the aim of analysing theoretical and practical aspects of the central theme, this work is so structured to highlight the necessity for the emergence of ODR, as well as the different outlooks at its definition. This work also addresses Online Arbitration as a concept, the practicalities and challenges in today’s commercial society (if any) and the modes the practice is effected. This analysis also addresses the Blockchain technology, its operations and applicability in conducting online arbitration. In conclusion, this writer will give his researched recommendations on the legal practicality of using Blockchain as a form of dispute resolution. 





Through the medium of the internet and ICTs, contracting parties from different nations are able to conduct and conclude commercial transactions (e-commerce)[10], with little or no human contact. This interconnected nature of e-commerce has made dispute resolution complex, as the transactions can involve multiple jurisdictions.[11]  With the astronomical growth of commercial activities in the Cyberspace (e-commerce transactions accounted for $1,856 billion of manufacturing shipments in the United States in 2008[12]), the necessity of a viable dispute resolution system was recognised.[13] As aforementioned, there are already established mechanisms to recognise and enforce the rights of parties, from the traditional adjudication procedures, to the erstwhile Alternative Dispute Resolution systems, which are inundated with documented challenges.[14] 

With the advancements made in information technology law, and the growing need of an expedient and cheaper method of dispute resolution,  the  Centre de recherche en droit public (CRDP) at the University of MontrĂ©al started the project known as ‘CyberTribunal’ in 1996, which offered customers online mediation and arbitration services in resolving disputes arising with traders online.[15] The CRDP project presented the necessary research on the practicability of conducting computer based disputes resolution with advantageous convenience.[16]

In January 2000, an international legal dispute on domain name was completely resolved online by parties and an arbitrator, all located in different States, birthing the first use of the internet as a means of dispute resolution. This led to the formulation of the Internet Corporation for Assigned Names and Numbers (ICANN [17]) administered by eResolution, an organisation set up to resolve domain name disputes.[18] This promoted the emergence of SquareTrade, which offers online mediation services for disputes arising out of eBay transactions.[19] The successes of these systems in administering ADR for online disputes stimulated the recognition of ODR by legal practitioners and technology enthusiasts.

ODR is defined as the ‘practice of resolving disputes via the Internet or digital applications.’[20] Legal scholars postulate that ODR is mainly another aspect of, or is synonymous, to ADR, but enabled through the internet and ICT services.[21]  This theory argues that ODR employs the traditional means of mediation, arbitration and negotiation in settling disputes virtually, with a ‘Fourth Party’ being the technological platform used, and the ‘Fifth party’ being the provider of  the service.[22]

There is the argument that ODR is not the simple adoption of virtual services in resolving a dispute, as it also acts as a medium of prevention of commercial disputes that occur within and outside the internet.[23] This school of thought proposes that, as all novel systems, ODR involves new tools/skills, techniques and assumptions for its effective applicability, hence, making it distinct from the traditional ADR.[24] Some examples of the distinctive features of ODR from ADR is the lack of face-to-face interaction between parties and the automatic record of all dispute data.[25] ODR platforms also have fully automated dispute resolution processes which makes use of developed algorithms in resolving disputes.[26]

ADR, although developed as a private-sector based regulatory regime, currently has governance introduced for certification and ethical behavior models.[27] Proponents of this theory propose that ODR should have organic emergence of its own regulations and governance.[28] It is proposed by jurists of this school of thought that ODR can generate its own internal system of governance, with premise on both I.T. law and ADR. This is has been coined as Legal Darwinism.[29]  This writer finds this school of thought on the nature of ODR more persuasive, as the system, although adopts the traditional forms of ADR, exists on a distinct medium which requires its individualistic set of rules, skills and governance.[30]

ODR has grown over the past decade to be a recognised form of dispute settlement by States and international bodies. The European Commission initiated the Electronic Consumer Dispute Resolution (ECODIR)[31] project for the virtual resolution of disputes between Europeans and cybersellers.[32] The United Nations Commission on International Trade Law (UNCITRAL) has also adopted its Technical Notes on Online Dispute Resolution[33] in recognition of ODR. The World Intellectual Property Organisation (WIPO) is another international entity that has also adopted ODR through the Uniform Dispute Resolution Policy.[34]

Although States such as the United Kingdom (UK),[35]  and the United States of America (U.S.) are keen on the adoption of ODR as part of their multi-door courtroom system, ODR is mainly employed by the private sector, with institutions such as eBay setting up comprehensive ODR mechanism to resolve disputes arising out their transactions.[36] There are other ODR platform service providers, who use specific dispute resolution applications, such as Benoam[37] and the Mediation Room.[38] This work will limit itself to the use of ODR by the private sector for commercial transactions dispute resolution.

As aforementioned, ODR makes use of ADR such as mediation, arbitration and negotiation. This work however, will limit itself to Online Arbitration, in consideration of the implication and legal feasibility of the novel Blockchain technology in settling arbitarble disputes online. To understand this, an analysis of the nature of Online Arbitration is expedient.



Online arbitration, also referred to as electronic-arbitration (e-arbitration), is one of the foremost aspects of ODR in resolution of cross-border e-commerce disputes through an asynchronous process,[39] although it is not rampantly in use as online-mediation.[40] E-arbitration is currently used mostly in the resolution of conflict arising from domain names.[41] A claimant, who intends to settle the dispute through e-arbitration, initiates the process by submitting statement of claim, indicating relevant facts and remedies, to the ODR platform.[42] Examples of ODR platforms that render such services are WIPO Arbitration and Mediation Centre,[43] internet-ARBitration (net-ARB)[44] and eQuibbly.[45]  The arbitration agreement is concluded with the arbitral process conducted virtually, as parties (claimant and respondent) virtually select an arbitrator from the list of accredited arbitrators registered with the ODR platform.[46] Either parties are entitled to raise objections as to the arbitrator.

E-arbitration can be conducted through e-mail, as all the documents for filing, as well as evidence and written submissions are filled through e-mail. This also includes the interaction between the arbitrator and the participating parties.[47]  Online arbitration also uses the mode of video-conferencing, by virtue of the ODR service provider.[48] The first award settled under the online-arbitration platform of WIPO on a dispute on domain name was the case of World Wrestling Federation Entertainment, Inc, v. Michael Bosman[49].

The New York Convention stipulates, through Article II Clause 1, that for an arbitration award to be validly recognised internationally, there must be a written form of agreement on the instance of a dispute in an international trade.[50] The term ‘written’ is described by the Convention to include the “exchange of letters or telegrams”,[51] which provides a liberalized interpretation of the term by State signatories indicating minimum requirements.[52] Article IV(I) makes provisions that an arbitral award should be in writing, signed by the arbitrator(s) on the original or certified copy of the award.[53] The UNCITRAL Model law on International Arbitration has broadened this position, by providing that an arbitration agreement can be documented via telex, telegram or other means of telecommunication, which records the agreement.[54] This position is indicative of the recognition of the online arbitration by States that have adopted the UNCITRAL model law interpretation as well.

Hence, on the premise of the interpretation by the UNCITRAL Model law, online-arbitration fulfills the necessary requirements of a valid arbitration agreement by the New York Convention, as it involves written agreements of parties to submit the dispute to an arbitral panel either, as provided by the ODR platform.[55] Legal jurists, who claim the use of ODR excludes parties from voluntarily submitting to the arbitration panel, have challenged this position using the WIPO model as a case study as that of mandatory arbitration.[56]

Scholars have also argued that on the instance of both parties failing to agree on the lex situs, the ODR platform will have to select the jurisdiction where the arbitration will be conducted.[57] The lex situs is an essential part of an arbitration proceeding as it dictates the procedural law that is applicable to the arbitral panel, and possibly influence and determine the outcome of the case.[58] Enforcement of the award however, is not as straight forward, as legal scholars have raised arguments against the governing laws of the arbitration, as e-commerce transactions involve multiple jurisdictions.[59] These arguments will be succinctly addressed subsequently in relation to e-arbitration and blockchain.

Although e-arbitration is not fashionably applicable to offline commercial disputes (as most of the disputes that occur with this medium relate to conflict on domain name) due to the legal uncertainties,[60] parties however make use this ODR service due to its convenience. Parties can conclude dispute resolution processes through a virtual medium unlike in traditional ADR.[61] This makes online arbitration more cost effective and cheaper that other ADR means.



The phrase, ‘one size fits all’ very much applies to the description of Blockchain, as it is one of the  21st century trending subjects due to its diversity and transformative potential in application in most aspects of human interaction.[62] Regulators, academics, legal practitioners and technology enthusiasts all are promoting the inclusion of the blockchain into various industries, with arguments of numerous advantages.[63] Blockchain is the foremost Decentralised Ledger Technology (DLT) that allows network members to share, store and transmit information in a continuous manner in the form of ‘blocks’.[64] These blocks contain series of data from past transactions accessible to participants of the network with either a private or public key.

Satoshi Nakamoto introduced the concept of Blockchain in 2008 in his paper on bitcoin and the great financial revolution introduced by cryptocurrencies.[65] However, this sparked interest into the technology itself and stretched beyond financial activities to include governance, real estate, entertainment and voting, etc.[66]


The types of blockchain depends mainly on the members of the network with access to the block, as there are permissioned and permissionless blockchains, which can be sub-divided into four categories: the public and private permissionless, as well as the private  and public permissioned.[67] Blockchain performs on two principal mechanisms, which are a decentralised and distributed network (which ensures that the technology can survive data breaches and other malevolent attacks as there is no regulatory central authority),[68] and consensus approval (where new blocks are added on validated approval by members of the network).[69] These two mechanisms make blockchain a well-secure technology for sensitive data storage and protection.[70]  


It is imperative to state that Smart Contracts are an essential aspect of blockchain, as they possess the computerized transaction protocol that executes the terms agreed on by participating parties in the network.[71]  Legal scholars, who hold more traditional views, have postulated that Smart Contracts can never be legal contracts as they lack the foundations of a contract, such as consensus ad idem, offer, acceptance and intention to enter into legal agreement, and thus fails to qualify under the provisions of the New York Convention.[72] This writer humbly disagrees with this position, as the UNICTRAL model law has made profound interpretation of Article II, to include any form of communication. The communication carried out through blockchain is through algorithms, and the subsequent signing in by parties with their private keys can transcribe the intentions of parties to be subjected to same, and can be interpreted to cover the legal concepts of offer and acceptance.[73]

Consequently, Developed States are on the verve of incorporating blockchain into the State recognised ODR platforms. An example of this is the application of blockchain technology by the Chinese government to the Hangzhou Westlake Court with a planned cooperation by the Hangzhou Blockchain Technology Research Institute to use blockchain technology to prevent tampering with digital evidence. In addition, the Guangzhou Arbitration Commission has issued the first arbitral award based on the 'Arbitration Chain'.[74]



How is Blockchain applicable to online arbitration?

As aforementioned, blockchain is a buzzing topic in today’s legal sphere, as legal practitioners and technology enthusiasts deliberate on the nexus between the two spheres, especially concerning international commercial arbitration. Arbitration practitioners have argued that blockchain is not a suitable platform to conduct arbitral proceedings, stating that the technology is “quite slow and expensive to store massive volumes of data.”[75]  This writer humbly disagrees with this position, as, although, the use of a public permissionless blockchain might be slow to store such data, private permissioned blockchain is the best suited for online-arbitration, as it has the potential to process thousands of transactions per second with low costs.[76] 

Within the bitcoin system, users have formulated a private adjudication system that works essentially with two digital keys (public or private), as parties can have access to the coins without dispute.  However, on an instance of a conflict, parties can contact a private adjudicator, who will have a third access key into the network to assess the facts through the blocks and trace the origination of the dispute, to determine the case.[77]  Blockchain as a form of transnational arbitration uses ‘multi-signature address’ system, which is highly self-sufficient and operates outside the influence of the State.[78] A multi-signature address allows private parties to set up a dispute resolution procedure that is effectively able to enforce its own outcomes.[79] Due to its technical and decentralised attributes, blockchain is argued to be the most practical and advanced form of online-arbitration.[80]

As Smart Contracts are self-executing, it raises the question of the possibility of the necessity of third party enforcement, as dispute resolution is considered to be rendered obsolete.[81] This writer humbly disagrees with this position, as there is the necessity for a third party adjudicator (as Smart Contracts are liable to disputes due to a number of issues such as human error in coding).[82]







[1] Jacob Bercovitch, Victor Kremenyuk, I. William Zartman. ‘The SAGE Handbook of Conflict Resolution’, (1st edn,  SAGE, 2008)

[2] Michiel Duchateau et al, Evolution in Dispute Resolution : From Adjudication to ADR (Governance & Recht), (Eleven International  Publishing, 2016)

[3] Ibid

[4] Today, ADR processes are being applied worldwide to a universality of situations hitherto governed by either litigation or, in extreme cases, by warfare between nations. For further reading, Albert Fiadjoe, Alternative Dispute Resolution; A Developing World Perspective (Taylor & Francis Group, 2004)

[5] Ibid

[6] 330 UNTS 38

[7] Hong-lin Yu, ‘A Theoretical Overview of the Foundations of International Commercial Arbitration’, 2008, 1(2) CONTEMP.ASIA ARB. J. 255

[8] Ethan Katsh and Janet Rifkin, Online Dispute Resolution:  Resolving Conflicts in Cyberspace (Wiley, 2001) p. 93-117

[9] Pietro Ortolani, ‘The Impact Of Blockchain Technologies And Smart Contracts On Dispute Resolution: Arbitration And Court Litigation At The Crossroads’, (2019) 24 Unif. L. Rev, 430

[10] Kenneth C Laudon, E-Commerce: Business. Technology. Society, (13th edn, Harlow: Pearson, 2019)

[11] ibid.

[12] US Census Bureau, ‘E-stats’, (Us Department of Commerce, 2019) , accessed 8th April, 2020

[13] Faye Fangfei Wang, Internet Jurisdiction and Choice of Law: Legal Practices in the EU, US and China, (Cambridge University Press, 2011)

[14] Michael E. Johnson  Piret Loone, ‘ Court's second '07‐'08 ADR case challenges arbitrator supremacy’, (2008) 26 Alt DR,  5

[15] Norman Solovay and Cynthia K. Reed, The Internet and Dispute Resolution: Untangling the Web, (Law Journal Press, 2003) 6

[16] Orna Rabinovich-Einy and Ethan Katsh, ‘Digital Justice: Reshaping Boundaries in an Online Dispute Resolution Environment’, (2014) 1 IJODR 5.

[17] ICANN, ‘Domain Name Dispute Resolution Policies’, (ICANN.ORG, 2020) accessed 8th April, 2020

[18] ibid

[19] SquareTrade, (Square Trade, 2020) accessed 9th April 2020

[20] Noam Ebner and John Zeleznikow, ‘No Sheriff in Town: Governance for Online Dispute Resolution : Governance for Online Dispute Resolution’, (2016) 32 Negotiation Journal 297

[21] Ibid.

[22] Supra 8

[23] Supra 16

[24] Supra 16

[25] Ethan Katsh, Janet Rifkin and Alan Gaitenby, ‘E-Commerce, E-Disputes and EDispute Resolution: In the Shadow of "eBay Law"’, (2000) 15 OMiO ST. J. DiSp. RESOL. 705

[26] Susan Nauss Exon, ‘Ethics and Online Dispute Resolution: From Evolution to Revolution’, (2017) 32 Ohio St. J. on Disp. Resol. 609, 616

[27] Supra 24, 303.

[28]  Supra 24

[29] Pietro Ortolani, ‘Self-Enforcing Online Dispute Resolution: Lessons from Bitcoin’, (2016) 36 OJLS, 602

[30] Supra 26

[31] Association for International Arbitration, ‘Electronic Consumer Dispute Resolution’, (Arbitration-Adr, 2020) accessed 1st April 2020.

[32] ibid

[33]UNCITRAL, ‘Technical Notes on Online Dispute Resolution’, (UNCITRAL, 2020) accessed 3rd April 2020

[34] WIPO, Guide to the Uniform Domain Name Dispute Resolution Policy (UDPR), (WIPO, 2020) accessed 28th March 2020

[35] Civil Justice Council set up an Online Dispute Resolution Advisory Group, with the purpose of implementing online schemes for the resolution of low-value civil claim for the UK judiciary. Further Reading: Civil Justice Counci, ‘Online Dispute Resolution for Low Value Civil Claims, (UK Judiciary, 2915)   accessed 8th April 2020.

[36] ebay, ‘Dispute Resolution Overview’, (eBay, 1995), accessed 8th April 2020

[37]  BENOAM, (Benoam, 2020) accessed 8th April 2020

[38]  The Mediation Room, (the Mediation room, 2020) accessed 8th April 2020

[39] Ihab Amro, ‘Online Arbitration in Theory and in Practice: A Comparative Study in Common Law and Civil Law Countries’, (Kluwer Arbitration, 2019) accessed 8th April 2020

[40] Karolina Mania, ‘Online Dispute Resolution : The Future of Justice,’(2015) 1 ICJ, 76

[41] Ibid.

[42] Osinachi Nwandem Victor, ‘Online Dispute Resolution: Scope And Matters Arising’, (Elsevier, 2015), <> accessed 8th April 2020

[43] WIPO, ‘Alternative Dispute Resolution’, (WIPO, 2020), accessed 8th April 2020.

[44] Internet-ARBitration, (Net-ARB, 2005) accessed 8th April 2020

[45] Crunchbase, ‘eQuibbly’, (Crunchbase, 2012) accessed 9th April 2020

[46] FINRA, ‘Arbitration Process’, (Finra, 2014) accessed 9th April 2020. 

[47] Emad Abdel Rahim Dahiyat, ‘A Legal Framework for Online Commercial Arbitration in UAE: New Fabric but Old Style, (2017) 26 ICTL 272.

[48] Ibid.

[49] Brian Young, ‘World Wrestling Federation Entertainment Inc. v. Michael Bosman: ICANN’S Dispute Resolution: ICANN’S Dispute Resolution Policy at Work’, (2000) 3 I N.C.J.L & Tech. 

[50] Supra 6.

[51] Supra 6

[52]Andrew Newcombe and Lluis Paradell, Law and Practice of Investment Treaties: Standards of Treatment, (Kluwer Law, 2009) pg5.

[53] Supra 6

[54] UN Doc A/40/17, Annex I

[55] Supra 42

[56] Tiffany J. Lainer, ‘Where on Earth Does Cyber-Arbitration Occur? : International Review of Arbitral Awards Rendered Online, (2000) 7 ILSA Journal of International & Comp. Law, 1

[57] ibid

[58] W. Michael Reisman et al, International Commercial Arbitration, (2nd edn, West Academic, 2015) 156.

[59] Supra 56

[60] Supra 56

[61] Hang L.Q., 2001, ‘Online Dispute Resolution Systems: The Future of Cyberspace Law’, (2001) 41 SCLR 354

[62] Sean Stein Smith, ‘Implications of Next Step Blockchain Applications for Accounting and Legal Practitioners: A Case Study’, (2018) 12 AABFJ 78

[63] Eva Micheler and Luke von der Heyde, ‘Holding, Clearing and Settling Securities Through Blockchain/Distributed Ledger Technology: Creating an Efficient System by Empowering Investors’, (2016) 11 Butterworths J. Int'l Banking & Fin. L. 652, 653                

[64] Supra 62

[65] Satoshi Nakamoto, ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ (Bitcoin 2008) accessed 9th April 2020

[66] Michael Crosby et al, ‘BlockChain Technology: Beyond Bitcoin’, (Berkeley, 2015) accessed 8th April 2020

[67] Ibrahim Shehata, ‘Three Potential Benefits of Blockchain for Arbitration’, (2018) 31 YAR 32

[68] Supra 62

[69] Supra 62

[70] Supra 62

[71]  Dr. Zaffar Ahmed Shaikh and Dr. Intzar Ali Lashari, ‘Blockchain Technology the New Internet’, (2017) 6 IJMSBR 4

[72]  Chamber of Digital Commerce, ‘“Smart Contracts” Legal Primer Why Smart Contracts Are Valid under Existing Law and Do Not Require Additional Authorization to Be Enforceable’ (Digital Chamber, January 2018),  accessed 8th April 2020.

[73] Jelena Madir, ‘Smart Contracts: (How) Do They Fit Under Existing Legal Frameworks?’, (SSRN, Dec 2018)  accessed 8th April 2020 

[74] FANG Xuhui,  ‘Recent ODR Developments in China’, (2017) 2 IJOR 35

[75] Ashish Chugh, ‘Why We Don’t Need Blockchain to Manage Cases in International Arbitration’, (Kluwer Arbitration, 2018) accessed 10th April 2020

[76] Supra 67

[77] Supra 29

[78] Supra 81

[79] Supra 29

[80] Emmanuel Gaillard, ‘Transcending National Legal Orders for International Arbitration’, (ICCA, 2013) accessed 10th April 2020

[81] Larry A DiMatteo and Cristina Poncibo, ‘Quandary of Smart Contracts and Remedies: The Role of Contract Law and Self-Help Remedies’ (2018) 26 European Review of Private Law 805.

[82] Eliza Mik, ‘Smart Contracts: Terminology, Technical Limitations and Real World Complexity, Law, Innovation and Technology’, (2017) 9 LITJ 269, 280